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Philips Semi chief steps down

Philips' chip chief to return to United States in move that makes some analysts jumpy.

Royal Philips Electronics announced on Wednesday that the chief of its semiconductor division will step down effective early next year.

The Amsterdam-based electronics maker said Scott McGregor will be replaced by Frans van Houten, head of the consumer electronics division. McGregor's departure will be effective Jan. 1. McGregor has been with the company since Sept. 1, 2001. He wanted to return to the United States, according to the company.

Some observers speculated that more than homesickness was involved. The chip unit holds a meeting for analysts on Friday, and a growing number of investors had speculated it could issue a warning on sales or profits due to slowing demand.

"There had been talk in the market Philips could come with a profit warning based on bad performance at the chip unit. Now they announce the CEO is going, and that is feeding these worries," said a fund manager at Eureffect in Amsterdam.

A Dutch trader said, "It was unexpected that McGregor will step down, and it won't be because of good results."

The chip unit turned to a profit of 143 million euros in the first six months of this year and was running at full capacity thanks to recovering demand for its products. Philips said in July that it expected the division's sales to rise 28 percent to 29 percent this year in dollar terms, in line with the industry.

Like other chip companies, Philips, which makes a wide variety of chips for the communications market, had been stuck between slow demand and high costs. Tough times forced the company to shed workers and manufacturing plants in its chip division before a comeback under McGregor.

"Whilst we respect Scott McGregor's personal decision to return to the United States, we regret to see him leave," Gerard Kleisterlee, chief executive of Philips, said in a statement. "He has led the semiconductors division through one of the most difficult periods in its history and managed to turn it around successfully into a leaner business with a strong focus on innovation."

McGregor, who helped design the interface for the Xerox Star, the first commercial computer for office use, also was the chief architect reporting directly to Bill Gates on Windows 1.0 during his time at Microsoft.

Van Houten will report directly to Kleisterlee. Rudy Provoost will assume van Houten's duties.

Reuters contributed to this report.